Ben Graham on Avoiding Self-Destructive Investor Behavior

Individuals who cannot master their emotions are ill-suited to profit from the investment process.” Ben Graham Father of Value Investing

A study by Dalbar underscores the importance of controlling emotions and avoiding self-destructive investor behavior. From 1992–2011, the average stock fund returned 8.2% annually while the average stock fund investor earned only 3.5%. We call the gap between these results the “investor behavior penalty.” Why have investors historically sacrificed more than half their potential return? Driven by emotions like fear and greed, they succumbed to negative behavior such as: